Caterpillar, Inc. has announced in a press release a possible workforce reduction of 10,000 people as part of its plan to lower operating costs by about $1.5 billion annually.
The layoffs are part of restructuring and cost reduction plans that the company is implementing.
Caterpillar said in the press release that it expects to permanently reduce 4,000 to 5,000 people between now and 2016, with most occurring in 2015.
The reduction will be in the company's salaried and management workforce, including agency.
Caterpillar also said in the press release that the workforce to be reduced will include people working in manufacturing facilities that the company is contemplating to consolidate and close down through 2018.
This will bring the total number of job cuts to possibly 10,000 or more.
Caterpillar will also be offering voluntary retirement enhancement program to employees that are qualified, according to the press release.
The retirement enhancement program will be completed by the end of 2015.
Doug Oberhelman, chairman and CEO of Caterpillar, said in the press release that the company is "a convergence of challenging marketplace conditions in mining and energy."
"While we've already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now," he said. "We don't make these decisions lightly, but I'm confident these additional steps will better position Caterpillar to deliver solid results when demand improves."
The New York Times adds that Caterpillar's announcement has unsettled investors who are already nervous about prospects for global growth.
The company has been a barometer for the broader economy of America due to Caterpillar being one of the powerful symbols of American exporting.
Shares in Caterpillar, one of the blue-chip stocks in the Dow Jones industrial average, were down six percent as the trading day ended, according to The New York Times.
The Dow, in general, ended the day down by 0.5 percent or about 78 points, while exchanges in Europe closed down roughly 2 percent.
Caterpillar also said in the press release that the remaining cost reductions are expected to come from lower period manufacturing costs.
This would include the savings from more than 20 facilities that the company is contemplating to consolidate and close down.
A portion of the cost reductions are expected to be effective in 2016, with more savings to come in 2017 and 2018, Caterpillar said in the press release.
The year of 2015 is the company's third consecutive year for sales and revenue being down, 2016 would mark the first time in Caterpillar's history that sales and revenues are down for four consecutive years.
